JAPAN DATA: Yen Rise Could Curb Rising Import Prices, But Y/Y May Stay Positive

The overnight range was 1.7372 - 1.7438, Asia is trading around {EURAUD Curncy}. The pair is consolidating after breaking back below 1.7450 last week as the AUD has outperformed in the crosses. The AUD continues to look as if it is finding some real demand and dips for the currency have been shallow as the market continues to price in rate hikes this year. The pair looks to be turning lower and while the 1.7650 area caps the market will now be looking to test the 1.7200-1.7250 area. On the day, look for rallies to back toward 1.7450-1.7500 to be met with supply with a view that we retest the lows seen last week. 

• The EUR/AUD Average True Range(ATR) for the last 10 Trading days: 77 Points

Fig 1: EUR/AUD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

The overnight range was 105.73 - 106.28, Asia is currently trading around {AUDJPY Curncy}. The pair is trying to recapture its upward momentum pushing back above 106.00 overnight, this morning though headlines reporting Katayama has discussed the one-way nature of the Yen move with Bessent who shares the same views regarding the weak Yen has seen an early dip. On the day, watch to see if price can maintain a foothold above 106.00, it has come a long way though so some prudence is warranted. Support is seen back toward the 105.20-105.50 area initially. A break back below 104.00-104.50 is needed to potentially signal a correction, until then dips should remain supported. 

• The AUD/JPY Average True Range(ATR) for the last 10 Trading days: 58 Points
• "JAPAN'S KATAYAMA: HELD BILATERAL TALKS WITH BESSENT, “TOLD BESSENT I'M CONCERNED ABOUT ONE-WAY YEN MOVES, BESSENT SHARES SAME VIEWS REGARDING WEAK YEN" - BBG

Fig 1: AUD/JPY spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

Today’s auction result extended the recent trend of firm pricing for ACGBs, with the weighted average yield printing 0.27bps through prevailing mids, according to Yieldbroker. However, demand weakened, as reflected by a cover ratio of 2.3433x, down from 3.4333x from the previous auction.

• The weaker demand came with the outright yield ~5bps lower than the previous auction, approximately 10bps below the cycle high.
• The slightly flatter 10s/30s yield curve versus the previous outing, around 25bps below its recent high, was potentially another negative technical factor.
• The recent deterioration in sentiment toward longer-dated global bonds may have also weighed demand.
• In the wake of the auction, the ACGB Jun-54 has traded ~0.5bps cheaper in the secondary market.